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General Motors is banking on bankruptcy. This is never good news to hear if your a retired worker of General Motors or the UAW. Recent word from the CEO of General Motors is that the company is going to more than likely claim bankruptcy. "More probable than ever", what does this mean for retirees? No one knows, and it seems like no one cares. One can speculate that if the bankruptcy takes the usual course, all previous contracts for financial obligations will become void, thus releasing the company from any obligation to it's retirees, the UAW, and more.
The problem is that a good majority of the country is a retiree from some company related to if not directly General Motors. General Motors, key word "General" is made up of a huge network of small and local manufactures that form together one of the biggest auto manufacturers in the world. GM has employed a good percentage of the country since the 1960's, and those people are the ones who are going to be left homeless if complete bankruptcy takes place. Is this right? Do the autoworkers that spent their lives in a factory instead of with their family deserve this type of treatment? The majority surprisingly think that this is right. 
The majority of the public sees the UAW and GM's retiree problem as part of the reason why GM is looking at bankruptcy. The enormous amount of money owed to these people makes it very hard for a company to operate during a stressed economy. Even though it seems like reducing this huge cost completely, is it morally right to void contracts completely with the people who gave their life to build the cars we love?
If GM claims bankruptcy, this also relieves them from their health insurance obligations as well. Thousands of retirees will now have to be on public health care, food stamps, and more government assistance. It's a tough call to make, do we let the nations need for money rest on the shoulders of General Motors, or do we turn them over to the government? These are the questions that should be addressed before a decision of such magnitude is engaged.
An alternative decision could be a hybrid type of bankruptcy that allows current obligations to be paused until the economy turns around. Once things start looking better for GM, the money would then start to flow again to pay off their financial obligations. It's the same as the credit issue average citizens face, but on a much larger scale. In this type of setup, GM's final obligation to it's retiree's would be postponed until it would be fiscally possible to make payment. While GM can't pay the bills, the government could absorb some of the cost by utilizing social programs such as unemployment, social security, food stamps, etc. Another credit tool more simply known as, I.O.U. is much more effective and morally right.
The people of General Motors
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If you are a retiree against complete bankruptcy and destruction of GM's obligation to you, there is a way for your voice to be heard. This article is published on all major news websites across the world. Cnn.com, Google news, etc. There is a good chance a GM CEO will read this article. Post your voice below!
(On right: the real local UAW members, it's not Al capone and mafia thugs.)
- Forward the link to this article to everyone you know.
- http://www.examiner.com/examiner/x-4824-Tampa-Sports-Car-Examiner~y2009m4d16-GM-bankruptcy-is-more-probable
- Post your comment below and encourage them to post as well.
Comments
Allowing corporations to go bankrupt after showing gross mismanagement for decades is morally wrong when long standing pension obligations (contracts) are allowed to just disappear.
The typical auto worker continued to come to work everyday and did as he or she is/was told by management, and did so chiefly for the "dangling carrot" of future retirement benefits.
While the executives are rewarded with millions of dollars in compensation for running a company into the ground, we are supposed to be happy to receive almost nothing after being promised more?
Everyone is missing the very important point that our pensions were part of our deferred compensation, and that the money was supposed to be placed in a seperate pension fund over the course of our working careers, and that all of our pension money should have already been there gathering interest.
Why can't alimony and child support be done away with in bankrupcy for individuals? Isn't that a contract too, and be morally wrong?
The day a judge throws out the UAW contracts the union has a right to strike and they WILL! Do not believe this is like some airline going under. Things not seen in decades regarding the labor movement will suprise some people. and shock others. The government was told this and will tread accordingly
I think it's bullshit that they can get away with this. GM just like other big companies are using the economy as an EXCUSE to do away with contractual financial obligations. Why not right? Everyone else is doing it. This country will turn pretty ugly if they screw over UAW, mark my word.
Quoting ////// "Do the autoworkers that spent their lives in a factory instead of with their family deserve this type of treatment? The majority surprisingly think that this is right."
WELL, MAYBE WE SHOULD CHANGE THE WORDS "IN A FACTORY" TO "IN FANTASY LAND". YUP, THATS THE ODDS THEIR RIDICULOUSLY RICH PENSIONS & BENEFITS WOULD HOLD LONGTERM
Quoting again ..."If GM claims bankruptcy, this also relieves them from their health insurance obligations as well. Thousands of retirees will now have to be on public health care, food stamps, and more government assistance. It's a tough call to make, do we let the nations need for money rest on the shoulders of General Motors, or do we turn them over to the government?"
OH, SO YOU WANT TO "TURN THEM OVER TO THE GOVERNMENT". WNTA YOU REALLY MEAN IS THAT TAXPAYERS SHOULD PAY FOR YOUR BENEFITS. WHY ? NO NOE PAY FOR OTHERS BENEFITS WHEN THIR COMPANY CAN'T PAY. WHAT MAKE YOU SO "SPECIAL". gO PAY YOUR OWN BILLS !
Let's not forget this "wash our hands of what's owed" technique is coming from the same folks who in early years made employees go through the worse conditions known to man. Working in a factory is HELL and everyday you risk losing your life, appendages, and more. During the summer it gets up to 140F with summer heat plus machine heat. Some men work under 40 ton dies that are suspended by cranes within inches of their lives. At that kind of weight, if it falls your liquid. It aint a patch of roses, and that's why they get paid so much. Read up on GM history of how they treat workers and you'll see. The "rediculously" lavish pensions you state only bring in minimal amount of money each month. Don't forget the health conditions that occur from working in a factory 80 hours per week. Destroyed cartilage in knees, hips, and backs. The comment below needs to be deleted because it is so ridiculous!
GM's $20 billion unfunded retiree healthcare obligation, frequently referred to as VEBA, has an interesting history. When GM made known it's intention to modify retiree healthcare benefits the UAW went on strike. In negotiations GM & the UAW sought to determine a best estimate cost for GM to maintain these benefits forever. The UAW recognized GM's financial footing put retiree healthcare at considerable risk going forward if the company continued to lose money, or worse, enter bankruptcy protection. Setting up and funding a VEBA would protect those benefits from GM's poor financial situation. In return for this protection, the UAW accepted less than what maintaining the benefits would cost GM as calculated over the years on an annual basis. Ultimately, in 2007 GM agreed to hand over $20 billion in cash to the UAW to fund the VEBA, from which interest on the funds invested would pay for the cost of the retiree healthcare. But GM didn't and doesn't have $20 billion in cash. A court approved the plan in 2008 and the money is coming due with VEBA schedule to assume the retiree healtcare obligation in January 2010.
Currently GM spends about $2-3 billion a year in retiree healthcare benefits. To maintain those benefits going forward would cost $2-3 billion per year.
In bankruptcy some argue GM's empty promise to somehow come up with $20 billion in cash to fund VEBA will be more compelling to a judge than the competing $27 billion claim of bondholders to be repaid the principal of funds loaned to and spent by GM (in part to cover pension, buyouts, and pay retiree and current employee healthcare benefits).
If bondholders are made whole with equity, GM's balance sheet will go positive by $2-3 billion in interest payments it no longer needs to make to bondholders. That's just enough to completely fund retiree healthcare as it is currently structured.
Perhaps bankruptcy is the perfect opportunity for the UAW to negotiate a new, more binding VEBA agreement that GM funds over time based on more realistic numbers. Up until its fully funded, GM would be bound by the court to continue to pay benefits at current levels.
It keeps benefits, ultimately wins the full VEBA, and gets rid of the bondholders.
The UAW shows you exactly what is wrong with America today. They continued to want jobs to remain in America and in the sam ebreath ask for a raise. If they don't get their way, they throw a fit and go on strike to try and break the company. I wouldn't employ these guys. I would look elsewhere for workers. These contracts are WAY bloated and need trimmed.
If Gm goes bankrupt it will throw thousands more on the unemployment roles and a few hundred thousand retirees into poverty.
The guaranteed government pension is a substantial cut in the pension now received.Ours would be cut in half.We would not be able to stay in our home or keep up our vehicle payment(repo time).We are a tiny sample,there will be more home foreclosures,repossesions,credit card default,food stamps needed and $13.5 billion needed by the government pension plan.It is underfunded and will need government aid,so the taxpayers will be paying anyways.
Many retirees are too old to get a job and those that are not...well where would you get a job in a state like Michigan where I live? Wouldn't it be cheaper and better in the long run to LOAN GM the money and get it paid back someday than to spend billions that will never be repaid?
Obama will never be elected to a 2nd term if he stabs the union in the back and allows the retirees to be thrown away(think AARP,UAW support).
I have been chatting and emailing with many uaw/union workers,retirees and others who are concerned about what a bankruptcy will do to our communities.
Most of us are discussing a big movement against Obama and the Democrats to oust any who supported a GM/Chrysler bankruptcy.Especially against Obama who supported us before he was elected.He is forcing GM into bankruptcy.Retirees will lose half of their pensions forcing them to lose homes and cars that are financed.
Most of us have always been democrats.Things change,we will be voting republican next time around
Patti:
The 2007 VEBA isn't funded yet but for a $4+ billion GM convertible debenture at 6%+ (as far as I know) which would probably get hit by the same amount as the other bondholders, but the pensions were overfunded until the economy tanked. If they can hold on until the markets come back, the pensions could be out of the woods. Depends largely on whether or not the administration loans enough to keep creditors at bay from forcing GM to look to them. It would be especially bad for the pension fund to lock in losses by having to sell investments now at all time lows.
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